Page 3645 - Week 12 - Thursday, 19 September 1991

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MINISTER FOR HOUSING AND COMMUNITY SERVICES

LEGISLATIVE ASSEMBLY QUESTION

QUESTION WITHOUT NOTICE

7 AUGUST 1991

Housing Trust Loan Repayments

On 7 Augustly, Mr Stevenson asked me:

Would the Minister investigate the possibility of having the software in the computer which controls the accounts of the ACT Housing Trust modified to allow borrowers to make loan repayments more frequently, thus reducing the total repayment time and the amount of interest paid by the borrower? At present the Housing Trust accounts are programmed for monthly repayments. If they are reprogrammed to allow fortnightly repayments as well, this can save hundreds of thousands of dollars in interest payments for borrowers. I would point out that with few exceptions, trading banks have already responded to consumer demand in this area and have modified their accounting and computing systems. Could the Minister respond as soon as possible in this matter so that borrowers will be able to take advantage of the very substantial financial savings?

My answer is as follows:

If mortgagors make payments equal to 12/26 of their regular monthly payments there are no advantages by making fortnightly payments on their loans.

This is because banking institutions and the Housing Trust use different mortgage documents when issuing loans and calculate interest on the loan in the following different ways:

banks charge interest on a daily basis on the balance outstanding - therefore more than one repayment in a month (eg fortnightly) will result in a lower total interest charge for that month; whereas

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